Mylan, which moved its corporate address overseas this year to lower its U.S. taxes, is now questioning why the FTC isn’t treating the drugmaker as a U.S. issuer.
Mylan, which moved its corporate address overseas this year to lower its U.S. taxes, is now asking the American government to weigh in on its battle with Teva Pharmaceutical Industries.
So far, it’s not getting an answer.
The generic drugmaker relocated in February through a transaction known as an inversion, a maneuver that has drawn criticism in Washington, D.C., for letting American companies cut their tax bills.
Now incorporated in the Netherlands, Mylan wants U.S. antitrust officials to clarify whether Teva should have been allowed to buy a 4.61 percent stake in Mylan without clearance.
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At issue is whether the Federal Trade Commission should consider Mylan a foreign or a U.S. issuer. Mylan argues it should pass the test of being treated like an American company under federal regulations because its principal offices are in Canonsburg, Pa. If Mylan were treated as an American issuer, the deal would need to have been cleared by U.S. antitrust officials.
“We know the inversion has invoked a lot of emotional and political banter, but the reality is we remain a U.S. issuer under all of the formal and informal guidelines,” Mylan CEO Heather Bresch said in an interview. “What we’ve said is you can’t be arbitrary and capricious.”
Mylan adheres to the same Securities and Exchange Commission rules as American issuers, she said.
The generic drugmaker is trying to fend off a $40.1 billion takeover offer from its Israeli rival, which has amassed a stake in Mylan to step up its pursuit. With that investment, Teva will be able to bring a case against Mylan in a Dutch court and will have the ability to vote against Mylan’s bid for smaller competitor Perrigo.
Typically, when a U.S. company buys a stake in another company of more than $76.3 million, it must report to antitrust officials, who then review the purchase.
There is an exemption, however, for acquisitions by foreign companies of non-controlling positions in “foreign issuers,” according to Paul Denis, an antitrust lawyer at Dechert in Washington, D.C. Foreign issuers are companies not incorporated in the U.S., not organized under U.S. laws, and not having their “principal office” within the U.S., he said. The term principal office isn’t defined in the regulations.
Mylan asked the FTC a second time last week to clarify whether the company is considered a foreign or domestic company by the agency’s standards. Bresch said she believes the FTC is treating Mylan as a foreign issuer — letting Teva amass its stake without needing approval — because of the politics around inversion deals like Mylan’s.
“If we are a U.S. issuer, it’s illegal for Teva to buy shares without HSR clearance,” Bresch said, in regard to the Hart-Scott-Rodino Act, which regulates antitrust reviews of mergers. “If we’re a foreign issuer, what’s the basis of being a foreign issuer? We think the public deserves to know if the FTC has changed its long-standing policy.”
Justin Cole, a spokesman for the FTC, declined to comment.